US 30-year mortgage rate nears 7%, restraining home purchases

US MORTGAGE rates approached 7 per cent last week, prompting a decline in applications for home purchases.

The contract rate on a 30-year fixed mortgage increased 13 basis points to 6.97 per cent in the week ended Mar 15, according to Mortgage Bankers Association (MBA) data released on Wednesday (Mar 20).

The MBA’s index of mortgage applications for home purchases declined 1.2 per cent to 146.

Mortgage rates have fallen from an October peak near 8 per cent, but remain more than twice as high as they were in 2021 before the Federal Reserve began an aggressive hiking campaign to quell inflation. When the Fed begins lowering rates, possibly in mid-year, that’s expected to boost demand across the housing market.

The MBA’s overall index for mortgage applications, which tracks both home purchases and refinancing, decreased 1.6 per cent last week to 198.2. The measure for refinancing fell 2.5 per cent.

The MBA survey uses responses from mortgage bankers, commercial banks and thrifts and has been conducted weekly since 1990. The data cover more than 75 per cent of all retail residential mortgage applications in the US. BLOOMBERG